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Industry bellwether UltraTech Cement Ltd isn’t losing sleep over current input cost inflation pressures. It is confident that headwinds from increased cost of imported coal, petroleum coke, packaging and logistics expenses are largely manageable in the June quarter (Q1FY27).
It does not expect an impact on its Q1FY27 profitability as price hikes in April would sustain, thus absorbing cost inflation. In Q4FY26, grey cement prices improved by around 2.5% sequentially. If April hikes sustain, realization outlook improves. In the last month, stocks of large listed cement makers, including UltraTech, have risen by 9-15% as the industry seeks to save margins through price hikes.
But what gives UltraTech an edge in a volatile scenario is cost discipline. If fuel prices increase, some pressure may surface from Q2FY27 onwards, the management acknowledged. Still, it is confident of being comparatively better placed than peers to manage this pressure through long-term supply contracts and a higher share of domestic coal.
Also, its cost efficiency programs have yielded a cumulative cost benefit of ₹185 per tonne in FY25/26. Here, UltraTech has taken measures such as reduction in lead distance and higher usage of green energy. UltraTech now expects to surpass its earlier cost-saving guidance of ₹300 per tonne by FY28.
Besides a tight leash on costs, a swift ramp-up in acquired entities and operating leverage benefits pushed Ebitda to an all-time high of ₹5,600 crore in Q4FY26, beating Bloomberg consensus estimates by 6%. UltraTech completed the integration of The India Cements and Kesoram Industries ahead of schedule, with full brand migration done in March.
Kesoram assets are now operating at ₹1,000 per tonne, which is in line with UltraTech’s southern operations. For India Cements, the management has brought unit Ebitda to ₹497 a tonne, and continues to target ₹1,000 by FY28-end. Ebitda is earnings before interest, taxes, depreciation, and amortization.
UltraTech crossed the 200 mtpa cement capacity milestone in India during April, becoming the largest single-country cement manufacturer globally (ex-China). This was achieved via timely organic expansions, value-accretive acquisitions, and strong execution. It continues to amplify efforts in this direction and plans to add around 37 mtpa capacities in FY27/28.
It has laid out a capital expenditure plan of ₹8,000-10,000 crore, to be spent over the next few years and targets to keep the net debt-to-Ebitda ratio below 1.
UltraTech’s Q4FY26 volume grew 9.3% to 44.7 million tonnes (mt), aided by robust demand, although below some analysts’ estimates, it outpaced industry growth of 7%, implying continued market share gains. FY26 volume grew to 154.3 mt. It eyes double-digit volume growth in FY27, ahead of 7-8% industry volume growth assumption.
Even so, near-term re-rating triggers are scarce. “While optimistic management commentary (mainly to tide over the impact of surging crude oil prices, at least in the near-term) is assuring, we see little merit in upgrading our earnings forecasts yet,” said an ICICI Securities report on 28 April.
ICICI cautions of the sector’s worsening fundamentals with elevated competitive intensity, potential impact of significant capacity additions of around 184 mtpa over FY26-FY28 and uncertainty over rising crude oil prices as the surge in fuel cost had dented the sector’s margins in FY23.
Analysts at Jefferies India have slightly raised FY27-FY28 Ebitda estimates by around 1.5% post Q4FY26 beat. They warn that FY27 will be a tougher year amid cost headwinds, though UltraTech may still target year-on-year Ebitda per tonne growth via price hikes and cost savings.
Meanwhile, UltraTech stock is trading at FY28 EV/Ebitda of around 16x, a premium to rivals Ambuja Cements, ACC and Shree Cement, showed Bloomberg data.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.